News Summary
A new bill introduced by Representative Alex Finkelman aims to remove investment caps for the insurance company FM, promoting local economic growth and job creation. Supported by Governor Dan McKee, this legislation seeks to repeal a 1984 law limiting nontraditional investments. With FM’s strong financial performance and advocacy from other insurers like Amica, the bill is expected to enhance competition and support technological advancements in Rhode Island. A hearing for the proposed legislation is scheduled for May 15, with urgency emphasized as the session closes on June 30.
Rhode Island – A recently proposed bill introduced by Representative Alex Finkelman seeks to lift investment restrictions for FM, a prominent insurance company based in Johnston, Rhode Island. This legislation, backed by Governor Dan McKee, would potentially enhance local growth by allowing FM and other insurers greater access to diverse investment opportunities.
FM, which rebranded from FM Global in July 2024, is a Fortune 500 company with a significant local presence, operating an 8-acre corporate campus and employing approximately 1,500 individuals in Rhode Island. Overall, the company boasts a global workforce of about 5,500 employees. During a meeting in April with House Speaker K. Joseph Shekarchi, FM’s CEO Malcolm Roberts discussed the importance of lifting caps on the company’s investment capabilities, which would facilitate their plans for local expansion.
The proposed legislation aims to repeal a 1984 state law that limits insurance companies’ investments in nontraditional assets, including hedge funds, private equity funds, and real estate holdings, to just 10% of total assets. By removing this restriction, local insurers would be permitted to invest unlimited amounts in what is known as Schedule BA investments. This legislative change aligns Rhode Island’s investment regulations with those currently enforced in neighboring states, such as Massachusetts and Connecticut.
Support for the bill extends beyond FM, with executives from Amica Mutual Insurance Co. also advocating for the removal of the investment cap. Amica supports the legislation based on the belief that it would enable better management of their investments, thereby enhancing their competitive position within the market.
Finkelman and other lawmakers highlight that the new legislation could be pivotal in creating jobs and advancing technological developments in Rhode Island. FM’s ongoing initiatives in research and development, particularly in renewable energy fields like solar panels, could significantly contribute to local job creation and economic growth. Furthermore, lifting the investment cap might benefit consumers by allowing insurers to improve their financial performance, potentially leading to lower premiums over time.
FM’s financial performance has demonstrated strength, reporting a profit of nearly $3.4 billion on revenues of $8.1 billion in 2024. This financial success could translate into greater capacity for investment and expansion, particularly if the proposed changes to the investment regulations come to fruition. The urgency of this legislation is underscored by recent relocation threats from companies like Citizens Bank and Hasbro Inc., both considering moves to Massachusetts in response to the state’s more favorable business climate.
The need for a favorable business environment is further emphasized by the mixed reception of past legislative actions, such as the Citizens Bank bill, which garnered criticism for its potential impact on state tax revenues. Lawmakers like Finkelman speculated that the original investment cap may have stemmed from apprehensions regarding hedge funds’ risks back in the 1980s, but changes in the economic landscape have since necessitated a reassessment of those restrictions.
A Senate companion bill sponsored by Senator Andrew Dimitri has been introduced, although details regarding a scheduled hearing remain pending. Senate President Valarie Lawson has expressed openness to reviewing this proposal, recognizing its potential to foster a more business-friendly environment in Rhode Island.
The proposed legislation is set for a hearing on May 15, with a pressing need for passage before the legislative session concludes on June 30. Stakeholders are advocating intense focus on this bill, emphasizing its potential to foster economic growth and technological advancement within the state.
Deeper Dive: News & Info About This Topic
- Rhode Island Current: Insurance Bill for FM Expansion
- Providence Journal: Opinion on RI Health Care Crisis
- Rhode Island Current: Health Care Spending Report
- Insurance Journal: RI Insurance News
- Insurance Business: RI Unfair Claims Settlement Bill
- Wikipedia: Rhode Island
- Google Search: Rhode Island Insurance Regulations
- Google Scholar: Insurance Laws Rhode Island
- Encyclopedia Britannica: Rhode Island
- Google News: Rhode Island Insurance News
